Conditions for foreign workers to purchase shares of Vietnamese companies

In Vietnam, it is not uncommon for individuals to invest their own capital in a certain field in today’s market economy. Foreign investors investing in purchaseing shares is one of those forms of direct investment. Purchaseing shares in a company can give the investor a share of the profits and power in the company, which can contribute to the company’s decisions.

Legal basis

• Law on Investment 2020 No. 61/2020/QH14 was passed on June 17, 2020 and documents guiding the implementation guidelines.

The concept of foreign investors

According to Clause 19, Article 3 of the Investment Law 2020: “Foreign investor is an individual with foreign nationality or an organization established under foreign law that conducts business investment activities in Vietnam”. Accordingly, foreign investors can be foreign workers who are working directly at Vietnamese enterprises and have the need to invest capital in enterprises to become company shareholders. It can be understood that: Foreign workers are individuals with foreign nationality, working in Vietnam under the form of a work permit or right in the enterprise that contributes capital or purchases shares. Thus, if they participate in legal relations on investment and business activities, such employees will be considered as foreign investors and comply with the provisions of Vietnamese law. on investment and business.

The right of foreign workers to purchase shares of Vietnamese enterprises

Foreign workers are fully entitled to purchase shares of Vietnamese enterprises according to the provisions of Clause 1, Article 24 of the Law on Investment in 2020, but must comply with the basic provisions of Vietnamese law on investment.

Form of purchaseing shares by foreign investors

Investors can purchase shares in the company

• Purchase shares issued for the first time or additionally issued shares of a joint-stock company;
• Purchase shares of a joint stock company from the company or shareholders.

Note on restrictions on transfer of shares by founding shareholders

• Within 3 years from the date the enterprise is granted the business registration license, the founding shareholder has the right to freely transfer his or her shares to other founding shareholders but may only transfer the common shares of the company to a person who is not a founding shareholder if approved by the General Meeting of Shareholders of the company. If the remaining founding shareholder does not agree to the transfer of shares to outsiders, the shareholder intending to transfer has the right to request the remaining shareholders or the company to purchase back the shares intended to be transferred.
• For dividend preference shares, redeemable preference shares and other preference shares: foreign investors can purchase when the company’s charter provides or decided by the General Meeting of Shareholders (including purchase by preferred shareholders).

Conditions for foreign workers to buy shares of Vietnamese companies

According to Clause 2, Article 24 of the Law on Investment 2020, the purchase of shares by a foreign investor of an economic organization must satisfy the following regulations and conditions:

• Having financial capacity through proof of financial capacity: savings book, bank account balance corresponding to the money to purchase shares, stakes in Vietnam;
• Market access conditions for foreign investors are specified in Article 9 of the Investment Law 2020 on industries, trades and market access conditions for foreign investors. Invest in companies with no investment restrictions, according to Vietnam’s commitment rate for foreigners in the company.
• Ensuring national defense and security according to the provisions of the Investment Law 2020;
• Regulations of the land law on conditions for receiving land use rights, conditions for using land in islands, communes, wards, border towns, communes, wards and coastal townships.

Cases where foreign workers need to carry out registration procedures to purchase shares of Vietnamese enterprises

Foreign investors carry out the procedures for registering to purchase shares of the company with the Department of Planning and Investment where the enterprise is headquartered, before changing members or shareholders if they fall into one of the following cases:

• The purchase of shares increases the ownership rate of foreign investors in economic organizations engaged in business lines and trades with conditional market access for foreign investors;
• The purchase of shares leads to the fact that foreign investors and economic organizations specified at Points a, b and c, Clause 1, Article 23 of the Law on Investment in 2020 hold more than 50% of the charter capital of the economic organization:
• The purchase of shares increases the foreign investor’s percentage of charter capital ownership from less than or equal to 50% to over 50%;
• The purchase of shares increases the charter capital ownership ratio of foreign investors when foreign investors already own more than 50% of charter capital in economic organizations;
• Foreign investors purchase shares of economic organizations with land use right certificates in islands and border communes, wards and townships; coastal communes, wards and towns; other areas affecting national defense and security.

As a law firm specializing in foreign investment consulting services in Vietnam,  Viet An Law is committed to providing you with consulting services for foreign investors on conditions for foreign workers to purchase shares of Vietnamese companies. South fastest, most convenient and most reasonable cost! For any difficulties or problems related to the procedure, please contact Viet An law firm directly for the fastest support!